Abstract

The report assesses the UK market for Champagne and other sparkling wines, including sales through both the off- and on-trade. Coverage in the report is restricted to wine of fresh grape, produced from the naturally fermented juice of the grape, with a minimum strength of 5.5% alcohol by volume (ABV).

• Champagne on-trade sales declined by 31% in volume sales in 2009 due in part to declining pub revenues but mainly the product' s high price-point at a time of recession. This means supermarkets alone now account for nearly half of all volume sales.
• Supermarket offers such as Champagne for £10 may have helped Champagne sales recover over Xmas 2009 but potentially at great cost to the product' s upmarket image e.g. 2.7m drinkers think that discounting/promotions mean that Champagne is no longer a luxury item.
• Sparkling wine is improving its reputation for quality, with 6m people thinking standards have got better in recent years and 8m thinking that there is little difference in quality between Champagne and sparkling wine, but noting that the latter is much cheaper.
• The recession has encouraged three in ten drinkers of sparkling wine or Champagne to switch to sparkling wine because it is cheaper.
• The recent popularity of sparkling wines is evident in the fact that seven out of every ten bottles sold in the UK are sparkling wine compared to three in ten that are Champagne.
• Climate change means that conditions are increasingly amenable to producing good English quality sparkling wine. This is something consumers here are starting to pick up on e.g. almost 3m people agree that the English make good quality wine these days.

Research methodology

Mintel International Group Ltd. is an independent market analysis company that prides itself on supplying objective information on a whole range of markets and marketing issues.

There are three main sources of information and research stages used in the compilation of Mintel reports:

• consumer research, where exclusive research - both quantitative and qualitative - is conducted for individual reports as well as drawing upon non-exclusive large scale surveys
• interviews (usually conducted by telephone), both formal and informal, with relevant members of the trade
• Mintel Information Consultancy and market size and economic database. Reports are written and managed by analysts with experience in the relevant markets.

Table of Contents

ISSUES IN THE MARKET

• Definition
• Abbreviations
• mySupermarket-Insights

MARKET IN BRIEF

• Recession causes slowdown in Champagne market...
• ... but sparkling wine is coming of age
• What will the future bring?

INTERNAL MARKET ENVIRONMENT

• Key points
• Societal attitudes towards alcohol changing
  • Figure 1: Changing shares of main categories of UK spend, at current prices, 1998-2008
  • Figure 2: Drinking trends, 2005-09
• In-home drinking is increasingly the key revenue stream
• Premiumisation and the effects of the recession
  • Figure 3: Trends in agreement with statements on luxury/status, 2005-09
• Champagne under pressure from sparkling competitors
  • Figure 4: Champagne main export markets in 2008

BROADER MARKET ENVIRONMENT

• Key points
• Rising duty and strong euro undermine margins
  • Figure 5: Trends in excise duty rates for Champagne/sparkling wine, April 2000-09
• An ageing population
  • Figure 6: Structure of the UK 18+ population, by age, 2004-14
• An upwardly mobile population
  • Figure 7: Structure of the UK population, by socio-economic group, 2004-14
• Still in the grip of a recession
  • Figure 8: Forecast of trends in PDI and consumer expenditure at real (2004) prices, 2004-14

COMPETITIVE CONTEXT

• Key points
• The battle for market share intensifies
  • Figure 9: Alcoholic drink types drunk in past year, 2005-09
• Rising importance of gender politics
  • Figure 10: Percentage consumption of drinks on a ‘big night out' compared to a ‘big night in' , July 2009

STRENGTHS AND WEAKNESSES IN THE MARKET

• Strengths
• Weaknesses

MARKET SIZE AND FORECAST

• Key points
• Champagne' s fortunes tied to economic recovery
  • Figure 11: Forecast of volume and value retail sales of the total Champagne market, in current and real prices, 2004-14
• Sparkling wine continues its ascent
  • Figure 12: Forecast of volume and value retail sales of the total sparkline wine market, in current and real prices, 2004-14
• Factors used in the forecast

SEGMENT PERFORMANCE

• Key points
• 7 in 10 bottles sold are sparkling wine
  • Figure 13: UK: volume and value retail sales of Champagne and sparkling wine, 2005-09
• Declining Champagne sales driven by poor performance in on-trade
  • Figure 14: UK: Volume and value retail sales of Champagne in the off-trade, 2004-09
  • Figure 15: UK: Volume and value retail sales of Champagne in the on-trade, 2004-09
• Growth of sparkling wine led by on-trade
  • Figure 16: UK: Volume and value retail sales of sparkling wine in the off-trade, 2004-09
  • Figure 17: UK: Volume and value retail sales of sparkling wine in the on-trade, 2004-09

MARKET SHARE

• Key points
• Major Champagne brands under pressure
  • Figure 18: Trends for market share in value for top-selling Champagne brands in the off-trade, 2008-09
• Own-label is building momentum
• Retailers target smaller, grower brands
• Premium sparkling wine brands are leading the market
  • Figure 19: Trends for market share in value for top-selling sparkling wine brands, in the off-trade, 2008-09

COMPANIES AND PRODUCTS

• Key points
• Boizel Chanoine
• Constellation
• Cordoniu
• Freixenet
• Laurent-Perrier
• Mentzendorff
• Moet Hennessy
• Pernod Ricard
• Remy Cointreau
• Vranken-Pommery Monopole

BRAND COMMUNICATION AND PROMOTION

• Key points
• Advertisers primarily relying on below-the-line activity
  • Figure 20: Total above-the-line advertising spend, for Champagne and sparkling wine, 2005-09
• Mo&eauml;t Hennessy is the biggest spender
• Taittinger takes to the skies
  • Figure 21: Above-the-line advertising spend, by top ten Champagne companies, 2007-09
• Freixenet outspends sparkling wine competitors
  • Figure 22: Above-the-line advertising spend, by top ten sparkling wine companies, 2007-09
• Top 20 spending brands
  • Figure 23: Above-the-line brand spend, by top 20 suppliers in the total Champagne and sparkling wine market, 2007-09

CHANNELS TO MARKET

• Key points
• Champagne increasingly more reliant on off-trade
  • Figure 24: Trends in the proportion of Champagne volume sales in the on- and off-trade, 2004-09
  • Figure 25: Trends in online supermarket discounting for Champagne/sparkling wine, December 2007- November 2009
  • Figure 26: Trends in the volume sales distribution of Champagne in the off-trade, 2007-09
• Sparkling wine is growing its share of the on-trade
  • Figure 27: Trends in the proportion of sparkling wine volume sales in the on- and off-trade, 2004-09

CONSUMER USAGE - CHAMPAGNE

• Key points
• Less frequent drinking affecting Champagne sales
  • Figure 28: Trends in consumption of drinking Champagne, 2007-09
• Champagne use is peaking too soon
  • Figure 29: Trends in Volume Importance Index (VII) of Champagne drinkers, by age group, gender and socio-economic group, 2009
• ‘Share-ability’ a major advantage for in-home market

CONSUMER USAGE - TYPES OF CHAMPAGNE AND SPARKLING WINE

• Key points
• Consumption of Champagne and sparkling wine over the past year
  • Figure 30: Consumption of Champagne and sparkling wine in the past 12 months, December 2009
• Own label' s stock is rising
  • Figure 31: Proportion of Champagne drinkers who drink own-label and branded, December 2009
• Cava blazes a trail but English sparkling wine is one to watch
• Sparkling wine has an older profile
  • Figure 32: Trends in index of usage of Champagne and sparkling wine drinkers, by age group, gender and socio-economic group, December 2009

APPENDIX - BROADER MARKET ENVIRONMENT

• Figure 33: UK Consumer confidence index, January 2006-December 2009

APPENDIX - CONSUMER USAGE

• Figure 34: Champagne and sparkling wine bought in the last year, by demographics, December 2009
• Figure 35: Champagne and sparkling wine bought in the last year, by demographics, December 2009 (continued)

APPENDIX: RESEARCH METHODOLOGY